Correlation Between IShares Russell and RBB Fund

Can any of the company-specific risk be diversified away by investing in both IShares Russell and RBB Fund at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Russell and RBB Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Russell Mid Cap and The RBB Fund, you can compare the effects of market volatilities on IShares Russell and RBB Fund and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Russell with a short position of RBB Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and RBB Fund.

Diversification Opportunities for IShares Russell and RBB Fund

0.96

Correlation Coefficient

IShares Russell  RBB Fund

Almost no diversification

The 3 months correlation between IShares and RBB is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap and The RBB Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB Fund and IShares Russell is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Russell Mid Cap are associated (or correlated) with RBB Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Fund has no effect on the direction of IShares Russell i.e., IShares Russell and RBB Fund go up and down completely randomly.

Pair Corralation between IShares Russell and RBB Fund

Considering the 90-day investment horizon iShares Russell Mid Cap is expected to under-perform the RBB Fund. In addition to that, IShares Russell is 1.41 times more volatile than The RBB Fund. It trades about -0.05 of its total potential returns per unit of risk. The RBB Fund is currently generating about -0.03 per unit of volatility. If you would invest  2,603  in The RBB Fund on December 27, 2024 and sell it today you would lose (60.00) from holding The RBB Fund or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

iShares Russell Mid Cap  vs.  The RBB Fund

iShares Russell Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Russell is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

RBB Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days The RBB Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, RBB Fund is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Russell and RBB Fund

The main advantage of trading using opposite IShares Russell and RBB Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, RBB Fund can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RBB Fund will offset losses from the drop in RBB Fund's long position.

The idea behind iShares Russell Mid Cap and The RBB Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.